MedPAC Discusses Telehealth, Physician Payment, MA, and Drug Pricing

The Medicare Payment Advisory Commission (MedPAC) met on April 11 and 12. MedPAC staff presented updated data on telehealth utilization in Medicare, which illustrated an overall decline in telehealth volume since the peak of the COVID-19 pandemic. Commissioners highlighted the importance of telehealth and audio-only services for individuals who lack time, financial resources, and transportation options, but expressed concerns that paying telehealth services at the same rate as in-person services would disincentivize providers from offering in-person visits, further limiting access to care.  

Commissioners also discussed approaches for updating the Medicare Physician Fee Schedule (PFS) payment updates, which they acknowledged no longer keep up with inflation. They agreed that the PFS payment should be updated but had differing options as to what changes should occur. The commission will continue to discuss policy recommendations for PFS updates in future sessions. 

The commission discussed plan-submitted data sources for Medicare Advantage (MA) enrollees. The commission found rates calculated from encounter data are not consistent with rates reported in plans’ bids and inconsistent treatment of exclusions in Healthcare Effectiveness Data and Information Sets data led to inconsistencies with MA encounter data. MedPAC also conducted an analysis of generic drug pricing in Part D plans and found in most cases generic point of sale prices only indirectly affects beneficiaries and Medicare because premiums/program costs account for pharmacy fees. Part D payments for generic prescriptions also reflected Maximum Allowable Cost (MAC) prices set by pharmacy benefit managers and in turn varied widely by plan and pharmacy with changes made by adjustments to MAC prices or pharmacy fees to achieve specific target prices across all (or most) generic prescriptions.  

Using new data available to the commission, MedPAC presented its updated analysis of the difference between payment for Part B drugs and 340B ceiling prices. The commission found that in 2022, aggregate Medicare Part B drug payments for 340B drugs exceeded the 340B ceiling price by 48%. The Centers for Medicare & Medicaid Services currently pays for these drugs at 106% of the average sales price, although it paid for these drugs at 77.5% of average sales price between 2018 and 2022. The commissioners discussed whether MedPAC should put forth policy solutions specific to the 340B program and will continue to update its analysis.